Overview
After the release of the Model 3 in 2017, Tesla took the EV market by storm. Model 3 propelled the EV giant to market dominance making Tesla the most valuable car company in the world. Before this car entered the market EVs were perceived as too expensive for the mass market ergo the EV market was barely competitive.
Tesla proved to the world that it was possible to make affordable EVs with Model 3 – which saw new entrants. Existing car giants such as Toyota, Ford, Nissan, and Volkswagen also entered the EV space to grab a share of the $185 billion market share.
Tesla has dominated the EV in the past 5 years but this may come to an end as predictions show that the market may drop to 11% by 2025. Nevertheless, its car sales continue to soar.
Factors like the COVID-19 lockdowns and new EV brands have contributed to a reduction in dominance. For instance, the giant has lost its European dominance to Fiat 500e. Slow production in the Berlin Gigafactory is partly to blame for the reduced supply of vehicles in Europe. Moreover, the shutdown of the Shanghai Gigafactory has greatly affected Tesla’s position in the market since the carmaker’s supply is unable to meet demand.
Why is Tesla Losing?
Several factors have contributed to the loss of market share. One of the major factors is affordability. Even though the Model 3 was relatively affordable when it launched, some competitors have managed to produce cheaper electric cars.
Remember Elon Musk’s objective after he became the CEO of Tesla – to make energy-efficient and affordable cars. He has managed to achieve this with some of his projects. While Musk is a genius with extraordinary capabilities, he overpromises a lot – something that may come to hurt his ambitions.
If Tesla does not focus on making cheaper cars, it may lose most of its market share to cheaper brands. Musk may consider making smaller cars – they are cheaper and more efficient. It is no surprise that Fiat is beating them with their small car.
Another factor is quality. I know this may come as a surprise to many but is a real problem facing Tesla cars. These are some of the most pronounced issues that depict a quality challenge across all the four Tesla vehicles; Model S, Model 3, Model X, and Model Y which are commonly known by the acronym S3XY.
1. Issues with autopilot capabilities and cruise control adjustment.
2 .Failed power steering system.
3 . Occasional loss of power.
4. Unable to be towed.
5. Poor build quality.
6. Prematurely worn-out battery.
Tesla is proud of not advertising its cars. “Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great”, says Musk. This is not as smart as its sounds considering the many players in the EV market. The company may attract many customers by marketing its S3XY. After all, who will order a Tesla if they have never heard about it?
By any standards, Tesla is a big brand and still has the capacity to address some of the factors. Musk should be keen to ensure that quality issues are addressed to ensure that customers get value for their money.
Just like Apple, Tesla enjoys a huge cult following thanks to its charismatic CEO. In addition to his genius, Elon Musk’s status and influence have been pivotal to the success of Tesla. Tesla and the EV industry, in general, will not be where they are without the input of the real-life Tony Stark.
Do you think Tesla will continue to dominate the EV market? Leave a comment below.